Platinum Gets Dented in the Auto Industry's Pileup

Slumping Car Demand Crimps Need for Catalytic Converters, a Big User of Metal, but Possible Drop in Mining Output May Buoy Prices,

At Friday's lows, spot-month futures on the New York Mercantile Exchange were down 38% on the year and 59% from the record set in March as the global economic slowdown pinches industrial use.

Platinum could fall further on weakness in the auto sector, but then stabilize or rise modestly as investment liquidation runs its course and due to potential for output cuts as the price approaches the cost of mining, analysts said. This makes it a great time to buy platinum wedding bands.

The impetus for the early year peak was worries about tight supplies exacerbated when South Africa state-owned utility Eskom Holdings Ltd. announced electrical shortages that curtailed mining output.

"Supply was being outpaced by demand," said Bart Melek, global commodity strategist with BMO Capital Markets. "We had a massive rally way above the marginal cost of production."

Since then, the auto industry has slumped. This hurt platinum demand because its main industrial use is for catalytic converters.

Nearby October platinum Friday fell $22.60, or 2.3%, to settle at $957 a troy ounce. Most-active January lost $20.80, or 2.1%, to $965.80.

James Moore, an analyst with TheBullionDesk.com, said platinum's recent move is cyclical, reflecting changed fundamentals. Moreover, he said, the fundamentals perhaps were "overexaggerated" as prices soared at the start of the year. But he doesn't look for the recent slide to continue much longer because a "delicate balance" remains in the market.

"Eskom has already said they can't increase their energy capacity for at least another five years," Mr. Moore said. "The producers are struggling against rising costs and having to excavate metal from much deeper ore bodies. This has a massive impact on their bottom line."

If profitability suffers, downward price corrections such as the current one could prompt producers to shut down some of their operations, he said.

"In my view, it would be naive to think that the market is going to continue lower," Mr. Moore said. "We may see some further downside initially, but then look for it to possibly stabilize around $1,000 to $1,300 for the latter part of the year and heading toward next year."

BMO's Mr. Melek estimated that the cash costs of production for platinum-mining operations are between $700 and $1,000 an ounce.

"They might still go lower," he said of platinum prices on things like platinum wedding rings. "But they ultimately will have to rebound because we're hitting the marginal cost of production for many producers."

CPM Group analyst Carlos Sanchez also said there could be more selling pressure, but prices may soon stabilize.

Not only has platinum been hurt by concerns about reduced motor-vehicle production, but expectations are for a shift toward smaller vehicles at a time of high fuel prices. Smaller engines require less platinum group metals for auto catalysts, Mr. Sanchez said. Meanwhile, no further supply disruptions have occurred in South Africa lately, he said.

But at the same time, he said, many investors already may have sold some positions.

"You may go to $900," Mr. Sanchez said. "But they're already low compared to what they have been the last couple of years. So you may not have further selling."

In other commodity markets:

SUGAR: Prices dropped to a four-month low on ICE Futures U.S. as speculators exited from bullish positions, but the market pared losses before a vote by the House of Representatives approving the $700 billion financial-rescue package. ICE March world sugar fell 0.47 cent, or 3.6%, to 12.61 cents a pound.

CRUDE OIL: Futures zigzagged before ending slightly lower as traders mulled whether the passage of the rescue bill would stabilize demand. Demand concerns were reinforced after the Labor Department reported that nonfarm payrolls fell more than expected in September, the steepest decline since March 2003. Light, sweet crude fell nine cents, or 0.1%, to $93.88 a barrel, on the New York Mercantile Exchange.

By: Allen Sykora
Wall Street Journal; October 5, 2008

How To Choose a Jeweler

Visiting a jeweler to shop for wedding jewelry can be an overwhelming experience because most shoppers simply don't know enough about the intricacies of gemstones and precious metals to make their choices easily. That's why finding a reputable and competent jeweler is so important.

Any jeweler should be willing and able to show customers a variety of gemstones and jew­elry in different shapes, sizes and qualities, and should stock a broad selection of ring styles to enable you to decide which best fits your pocketbook.

Your jeweler also should be able to help you learn to see with your own eyes why some diamonds of similar size differ greatly in value, or from a practical perspective - how you might reasonably select from a variety of different sizes, all priced similarly to fit your budget.

All of us like to feel that we re­ceive a good value when we make a major purchase. Take time to find what you want and where you want to buy it. Diamonds, for instance, can be confusing. Even if two dia­monds are the same size, color and clarity, differences in the way they were cut, their finish and fluores­cence can cause one to be worth much more than the other.

Buying Gemstones

Gemstones have been sought after and treasured throughout history. They have been found in ruins dating back several thousand years. They are valued as gifts sym­bolizing love.

Generally, the price of any gem­stone is determined by size, cut, quality - which includes color, clarity and treatments - and type.

Here are some simple questions to ask about quality:

• Has it been heat treated?
• Is the stone natural or synthetic?
• Are there any noticeable scratches, chips or inclusions?
• Is the color even throughout the stone?
• How strong is the color? Is it vivid?
• If you are buying the stones for earrings or cuff links, are the stones well-matched?

Advice To Protect Jewelry

Try to protect any jewelry from scratches, sharp blows, harsh chemicals, extreme temperatures and sunlight.

Here's some advice about how to keep your jewelry in good condition:

• Store jewelry separately so it doesn't scratch other jewelry.
• When doing household tasks such as gardening and cleaning, be certain to remove rings.
• Put your jewelry on after washing or bathing and applying any makeup or hair spray.
• Never wear jewelry while swimming in a swimming pool. The chlorine can cause damage to various gemstones and gold.
• Avoid storing your jewelry next to a heating vent, window sill or on a car's dashboard. Store jewelry away from sunlight (the sun may fade the gemstones).
• Always store bead necklaces (such as lapis, pearls, etc.) flat; silk stretches over time. Do not store pearls in plastic bags.
• Gemstones may become loose in their settings (and possibly fall out). Be certain that stones mounted in rings are not loose and don't rattle. The prongs of a ring can and do wear down. If the prongs wear down too much or break, you can lose the stone. Prongs are easily "retripped" by most jewelers to keep the stone secure.
• Most jewelers will restring necklaces or reset stones (for a fee)
• Sterling silver will polish up by rubbing or buffing it with a soft cotton cloth.
• Store silver in plastic bags with an interlocking seal to make it less prone to tarnish.

Remember, also, that the hard­ness of stones plays into how they can be treated. Hardness is based on a gem-trade standard called the Mohs Scale. The higher the Mohs Scale number, the harder the stone. The highest Mohs Scale rat­ing is 10, for diamonds.

Anything rated less than 7 on the scale can be easily scratched - coral, lapis lazuli, opal, pearl and turquoise, for instance. Gold, silver and platinum are at the soft end ofthe scale.

Key Point to Consider

When you're searching for a jew­eler, remember that you may spend thousands of dollars over time at this business. It's imperative to find someone you feel comfortable with and someone who is willing to work with you when you have questions about jewelry, repairs or perhaps special orders.

Find a store where the owner is the jeweler, someone actively involved in the store's operation who knows his clientele and the business.

Your chosen store should be able to design and create fine jewelry.

The staff should be happy to spend time with customers to edu­cate them about jewelry and what's currently available on the mar­ket. Work should be done on the premises. After all, you've chosen your jeweler because of his or her expertise.

Look for well-known jewelry and watch lines while you're shopping. Your jeweler should offer free gift wrapping, in-town delivery and, above all, superb customer service combined with an expert staff.

Original Article by
Wall Street Journal

Copper Gives Necklace Polished Look

Retired after 44 years as an executive for the fashion division of J.L. Hudson Co., Joyce Hurley of Huntington Woods continues to share her sense of high style as a beaded jewelry maker.

"After several years of retirement, I decided to become a jeweler designer and maker," says Hurley, whose stunning creations make a bold and sometimes ethnic statement.

She enhances the beauty of semi-precious stones by adding silver beads as a visual contrast to many of her designs. More recently, she sometimes uses copper in place of silver, giving her work an entirely different look.

"I've been introduced to working with copper. It's been about a month now, and I've really adopted it. It's become about an eighth of my inventory," Hurley remarks. "The more I saw it, the more I could see how well it went with the kind of jewelry I make, and the kind of natural stones I like to work with."

Hurley, who makes "mostly one-of-a-kind" pieces, admits to buying the bulk of her beads from "a wholesaler in Royal Oak and from bead shows."

She adds, "I find them (shows) a good source of things you don't see locally. I don't buy anything from a retail store, unless I run out of something basic, like a clasp."

This is the third year Hurley has sold her jewelry on Saturday mornings at the Grosse Pointe Park Farmers Market, which operates May through September. Her necklaces range from $36-$70.

By: Jocelynn Brown
Detroit News; September 20, 2008

Costs Searing Miners Could Boost Metals

Escalating production costs and cooling commodity prices are dragging down once-mighty mining and metals companies. But high costs could eventually force another price rally.

Traders are watching for the point where supply tightens thanks to a shakeout among producers that can't profit amid lower prices.

Some of the miners in the most pain are on acid -- lots of it. Sulfuric acid is used extensively in mining to extract nickel, copper, platinum, titanium, silver, diamonds, and uranium. But miners must compete for sulphur with the booming fertilizer industry. After a period when you could hardly give it away, sulfuric acid has gotten exceedingly scarce, rising some 1,000% in the past year. Some nickel mines consume $10,000 of acid just to extract a ton of nickel, now selling for about $20,000, down from $50,000 last year.

Mines and smelters also consume massive amounts of coal and oil to power blast furnaces, fuel trucks and process ore. Oil is up about 57% over the past year, while coking coal has tripled. Steel costs have soared; hard-to-find engineers can name their price; and the escalating cost of explosives -- derived from ammonia, a product of natural gas -- is blowing up margins. And while metal prices has soared recently, many jewelers, like Design Bands, buy up front, and have a large inventory that was bought at yesterday's prices. Companies like Design Bands are able to sell designer wedding rings at affordable prices.

In 2006 and 2007, when metals prices were climbing, inefficient and mothballed mines reopened. Now nickel, zinc and aluminum are fetching less than it costs such marginal suppliers to produce them, says Jim Lennon, senior commodities strategist at Macquarie Securities in London. When zinc, used to coat steel, climbed to $2 a pound in mid-2006, mines spending a dollar to produce it thrived. Zinc now runs about 80 cents.

Once more high-cost producers fall, says Jeremy Weir, chief executive officer of Galena Asset Management, a subsidiary of oil and metals trader Trafigura, "there's a likelihood that some of these markets that have been depressed from their highs could see a price recovery."

Factory Reading Is Key on Tuesday

Like commodities, the U.S. economy has been supported by strong global demand, a prop that has grown shaky.

Further evidence of this may come Tuesday morning, when the Institute for Supply Management releases its U.S. manufacturing index for August. Economists, on average, think it will slip a bit, to 49.5 from 50 in July. Any reading below 50 indicates factory activity is shrinking.

Though hardly robust, such a reading would be much higher than the 41 that usually marks a recession. Though it has slowed considerably in recent years, the index hasn't come close to that level, even during the fourth quarter of 2007, when gross domestic product contracted.

Healthy export demand has kept factories treading water. A weak dollar has helped, by making U.S. exports cheaper and more competitive. The dollar has rebounded this summer, but that shouldn't affect exports for some time.

What could show up soon is the slower growth gripping various economies around the world. The ISM's index of new export orders fell to 54 in July -- still relatively strong, but the lowest reading of the year.

By: Ann Davis
Wall Street Journal; September 2, 2008

Harry Winston Profit Soars

Harry Winston Diamond Corp. said second-quarter net income more than doubled as the company banked on strong growth in emerging markets.

"Our businesses in Asia, Europe and the Middle East have been sufficient to offset the general market softness in the U.S. and Japan; this contributed to our strong retail finish for second quarter," President Thomas J. O'Neill said, adding that the company was on "firm footing" for the second half of the year.

The comments echoed those of fellow jeweler Tiffany & Co., which in late July said strong sales in the Asian-Pacific and European regions offset weakness in the U.S.

The diamond miner and retailer reported net income of $49.9 million, or 81 cents a share, compared with $20.1 million, or 34 cents a share, a year earlier. The latest quarter was helped by a $4.3 million insurance recovery and a drop in the effective income-tax rate to 33% from 47%. The gross margin widened to 60.5% from 52.8%, helped by the insurance recovery.

Sales rose 7.4% to $186.1 million in the quarter ended July 31. Mining sales remained at $105 million as higher prices made up for lower volume.

Wall Street Journal; September 10, 2008

Diamond Mining Is Losing Its Shine

Buy Diamonds and Diamond Wedding Bands Now Before Prices Rise!

Diamonds may be forever. Diamond mining, maybe not.

With growth in diamond prices trailing far behind that of most commodities, some miners are turning their sights toward gold, iron ore, and phosphate instead of sparkle.

Flinders Diamonds, an Australian miner, recently reassessed its exploration areas and identified a target in western Australia for iron ore, prices of which have been soaring along with demand for steel. It changed its name to Flinders Mines Ltd. to reflect its exr panded focus. Its stocks soared upon the April announcement.

Last June, diamond miner Sierra Leone Diamond decided to change its name to African Minerals Ltd. to reflect its exploration of precious and base metals across the African continent. Bonaparte Diamond Mines of Australia just concluded a diamond joint venture in Namibia to focus instead on exploring a phosphate project there because "the economic return" from diamonds "doesn't warrant moving into the next phase," Michael Woodborne, the firm's managing director, said in a statement. Prices of phosphate, a key component in fertilizer, are up dramatically lately.

For miners, the opportunity, cost of investing time and shareholder money in diamonds is just part of the problem. On the demand side, diamond sales, at least in the U.S., have been struggling. Citing a sluggish U.S. market, which accounts for about 50% of the total, De Beers Group reported a 3.7% fall in revenue to $5.9 billion last year.

Compared to most commodities, diamond prices have been "extremely unexciting" over the past few years, says Charles Wyndham, founder of PolishedPrices.com, which keeps a wholesale diamond price index. This year, it is flat, and up 3.6% from a year earlier. Over the same time, S&P GSCI, a commodities benchmark, is up 37.6% and 73.5%, respectively.

The departure from diamond mining marks a reversal from several years ago. At least 60 new diamond-mining companies sprung up after diamond giant De Beers went private in 2001, estimates David Hargreaves, a mining and gemstone consultant to United Kingdombased broker Hoodless Brennan Ltd. Yet, some newcomers may be finding that diamond mining is a trying and costly endeavor. Even if you find a diamond mine, it may take seven to 10 years before it produces, Mr. Hargreaves says.

Diamond mining is viewed as the "worst kind of gambling," says Theo Botoulas, chief executive of BRC DiamondCore Ltd., a diamond miner in South Africa.

In January, Tahera Diamond Corp., a Canadian miner, ceased operations and filed for bankruptcy-courtprotection. "Not every diamond mine will be successful.lt's a very high-risk business," said Gareth Penny, De Beers's managing director.

Still, several players, like BRC, are keeping at it. They argue that long-term demand for diamonds world-wide is good, and prices of big, better-quality stones have risen rapidly. Instead of shunning the gem business, Canadian miner Aber Diamond Corp. took full ownership of Harry Winston Diamond Corp. and focused on high-end retail sales before it started trading under its new name on the New York Stock Exchange in November. The company reported a 10% increase in overall revenue for the first quarter because of strong sales growth in Asia and Europe, though its mining production fell 31%.

De Beers has said it expects demand from markets like China, India, the Middle East and Russia to grow. It has raised prices of rough diamonds by an average of 8.5% so far this year. De Beers has been aggressively investing in new mining projects, and it will bring four major projects into full production this year.

Rio Tinto PLC, which produced 16% of the world's rough diamonds by volume in 2007, estimates diamond prices to rise in response to "a sizable supply gap" this year and expects demand will outpace supply for the next decade. Meanwhile, Diapason Commodities Management, a U.K.-based company, is planning to launch a "diamond fund" soon, in the form of a listed investment firm whose portfolio will be polished diamonds.

"Mining is a long-term game," said Mr. Wyndham of PolishedPrices.com. "Those who are switching back and forth from one commodity to another usually won't succeed."

By: Carolyn Cui
Wall Street Journal

Money Saving Wedding Ideas

Save Thousands on Designer Wedding Jewelry at DesignBands.com

They say there are two things that will withstand the test of time, and love is one of them.

However, with gas prices flirting with $4 a gallon and lavish weddings chock full of frivolity, lovebirds are looking for the most cost effective ways to tie the knot.

And they aren't skimping on the details.

THE DRESS AND TUXEDO

Summer may be known as the season for weddings, but according to Cathy Heim, seamstress at Nicole's Bridal Boutique in Seneca, brides-to-be are choosing simpler designs and more contemporary looks to satisfy both the warmer weather, as well as lighter wallets.

"You can pay just as much for a formal dress as can you for an informal," Heim said. "But for this area, people are buying a lot more conservative."

Heim, who is working on more than 20 weddings this month alone, said business is as steady as ever, adding that she has received a lot of requests to alter dresses bought from outside dealers. The four-year employee said many women are purchasing the perfect dress elsewhere, but sticking to local seamstresses for the modifications, saving a much needed tank of gas as well as some sanity.

Heim said the only major cutbacks so far include slightly less expensive bridesmaids' dresses - shortened from full-length to tea. She said she doesn't expect any bride's budget to favor a dress that is subpar to what they have always dreamed of.

"Every bride has a dream," Heim said. "And they will sacrifice to get that. Now whether that means a cheaper tuxedo or fewer flowers, I don't know. But the dress (the average is $650 at Nicole's) really isn't the biggest cutback."

And neither is the tuxedo, according to Rob Walter, an employee with F.L. Crooks and Co. on Main Street in Clarion.

The specialty clothing dealer, offering a range of prices on both lower-end designs and top name tuxedos, said the average cost for the groom comes in at around $100 for a complete rental with the most expensive falling somewhere near $160. And while the only shift Walter has seen is to cooler microfiber shirts, many men are still going for a quality fit and fabric to satisfy their wants as well.

"Everything's really just on par as it's always been," Walter said. "I haven't noticed any big difference."

THE RING

Perhaps the most illustrious piece of wedding memorabilia is the smallest and oftentimes most expensive for the big day.

Niki Volmrich, owner of Feldman Jewelers in Franklin, said couples are shopping vigilantly, but 'going for the gold' when it comes to actually buying.

"I haven't seen where they're really cutting back," Volmrich said. "I mean, they're still buying, but they're just perhaps not spending as much."

A veteran in the jewelry industry, having owned her Liberty Street shop for 23 years, Volmrich said those looking to celebrate nuptials are keeping a keen eye out for more traditional pieces that will not only look good, but won't break the bank.

One way brides are saving money is by purchasing titanium or tungsten bands for the groom, rings that not only have the weight and look of more expensive metals, but cost much less. An average price equals out to a little more than $100. Volmrich said many of the aforementioned materials are a lot more durable than conventional models.

However, she noted, grooms are still perusing the shelves for diamonds set in gold and platinum for their brides, in addition to the pricey engagement rings bought prior to the actual day.

"(Rising prices) don't really affect wedding jewelry, other jewelry yes, but not this," Volmrich said.

She also said the store's registry has consistently done quite well, with brides requesting various decorative accessories and everyday dishware.

"The ring is something you will have forever. You're going to be looking at that for years and years...hopefully," Volmrich said with a laugh.

By: Nicholas Hess
from Derrick.com